Goldman Sachs has revised its expectations for the S&P 500 following a steep market downturn, with the index dropping 9% from its peak in recent weeks, signaling a potential correction. The downturn was notably driven by the decline in “Magnificent 7” stocks, which saw share prices fall by 14%, adjusting their P/E ratios from 30x to 26x.
In response to the recent turbulence in U.S. equities, Goldman Sachs has lowered its S&P 500 target, acknowledging a severe market hit. The bank now foresees the S&P 500 reaching 6200 by the end of 2025, revising down its initial target due to a 4% cut in their modeled fair-value P/E multiple.
Facing the impact of increased policy uncertainty and economic growth concerns, Goldman Sachs has adjusted its S&P 500 projections. This adjustment was prompted by the mixed performance of major stocks and broader market dynamics, as economic anxieties and strategic repositioning drive volatility in the markets. As such, Goldman’s revised EPS forecasts now stand at $262 for 2025 and $280 for 2026.
The influential finance firm also highlighted the factors contributing to the market’s bearish tone, including rising policy uncertainties, especially around tariffs, and concerns about economic growth prospects. Despite these challenges, a majority of large-cap mutual funds have managed to surpass their benchmarks so far this year.
Looking forward, Goldman Sachs outlines three pathways for potential market recovery: a more optimistic economic forecast buoyed by favorable growth data or tariff adjustments, recalibrated equity valuations, or shifts in investor sentiment.
